With reference to appropriate examples, discuss how national culture acts to influence how organisations manage their employees. Describe and evaluate how a multinational corporation might address cultural differences when deciding on how best to configure HRM in an overseas subsidiary. “A strong culture means organisational excellence (Peters & Waterman, 1982)” There are two types of culture, national cultural and organisational culture also known as corporate culture.
Organisational culture should help the firm shape their corporate culture meet corporate strategies. National culture should help to determine the corporate culture of the Multinational firms (Johnson and Turner 2003). Shein (1992) states that culture is “a pattern of shared basic assumption that the group learned as it solved its problems of external adaption and internal integration that has worked well enough to be considered valid and therefore, to be taught to new members”. But do these cultures act to influence the organisations management of their employees.
How do corporations deal with cultural differences within an organisation when deciding on how to best configure HRM in an overseas subsidiary. This essay will try and answer these problems by looking at examples to provide a full answer. Hofstede (1991) stated that ‘culture comes from collective thinking of the mind’. Culture is intangible but very valuable to a company, if the correct culture is created. It is what the beliefs and basic corporate objectives are based around. Johnson and Turner (2003) use culture and placed it in to eight key determinants.
These include language religion, history, education, politics, social, economic and symbols. They all help to create the make-up of the corporate culture of the business. Some good examples of this are Facebook which has relaxed workspaces to help created relaxed but creative minds; this is completely different to the MOD which requires members to wear full service uniform when at the head office. Out of these key determinants, there is clear evidence these taking place in today’s workplace.
Firstly religion, we can see that there are influences from the Christian world that are taking effect including Sunday work where there are now shortened working days for many businesses such as John Lewis. This extends to America, where in some states it is still illegal to sell alcohol on Sundays; Connecticut is one state that still uses this rule. This Sunday rule can have an influence on employees and HRM management as they will have to work around the cultural beliefs of that country. We can also see the more time is given for religious holidays and although not fair some religions are still seen as outsiders such as Islam.
Language barriers are also a cultural factor that needs to be overcome by HRM within the work place and when moving abroad. Fortunately for the UK the international language is in fact English but this has still meant that many managers are now bi lingual to help cope with the difficulties of foreign language and the implications that it can have on business. Bi lingual mangers are much more attractive to subsidiaries as they can help connect cultures. Education has given many Multinational firms the motivation to move to areas of cheaper labour.
But this can sometimes cause problems as these countries don’t have the skilled education needed to perform roles within companies. Germany has always given its people a chance with more apprenticeships than any other nation. Learning what different cultures are all about, is key as many of the cultural acts can influence the tiniest things, for example symbols in china mean that some letters and numbers are luckier than others, this means when building large skyscrapers they may need to miss out numbers as it is unlucky to be working on these floors.
These are all key factors to take into account when moving into an overseas subsidiary, but we need to understand how HRM should ideally manage corporate when moving into a new overseas subsidiary, we can do this through a number of fundamental actions. These include socialisation, increasing the commitment from individuals, formation of strong bonds between workers, cutting the costs of managing employees to create a consistent outlook for employees and finally the important role that Human resources use to reinforce core organisational values.
Simple activities such as team building and training days can get employees to interact and work together. These core structures are used by multinational cultures all over the world and business such as IBM and Google. This is the ideal state, but in reality there can be a different outcome. Sexism, racially abuse, and forms of bullying can place difficulties on corporate culture and cause the breakup of organisations. It can lead to difficult decisions being made which leave management with difficult decisions such as the Richard Keys and Andy Gray sexism row at Sky last February.
When it comes to corporate culture Shein (1992) is one of the key commentators of his time he came up with the ‘three levels of culture’; this model shows the three levels that help describe culture. The three levels are Surface manifestation, values and basic assumption. All three are visible but some more than others. For surface manifestations this is the physical element of an organisation, so artefacts and physical elements to the organisations, unsurprisingly these have a high visibility.
A large MNC will have strong slogans that will give you a good insight into the brand and as an employee you would be working for this slogan. For example, Apple® has the slogan ‘think different’ (Apple. com 2011), for the employee this is recognisable physical element which will follow the brand around the world. Employees will have that as the back of their mind, and this slogan will encourage those in the business to work towards this goal and slogan. A culture is then created from this slogan and the company can move forward in this direction.
Values; are the moral code that the company will endeavour to carry through with; these are not easily visible but will be carried with the corporation. When Steve jobs set about building the apple brand he used the same values right up until the day he died. He created a new age culture that has been used by many other companies such as Google® and Facebook® These included making cutting edge designs and filling consumer’s needs. Finally, is the basic assumption; these are invisible and are usually taken for granted; these are what the members of the culture believe to be reality.
Usually influence perceptions thoughts and feelings. This model shows us that it’s sometimes very easy to forget that the most important culture factors are those that have been around the longest. There is clear evidence to show that the evidence built up over time the brand image can be important to show these factors. All of these factors have proven very useful when looking at company’s culture. For example Google has a strong brand image but with it a good corporate culture. They have the physical element of causal working environment.
This maybe the relaxed attitudes that comes from head office. The American culture allows them to do this. This will not always be the case. We have seen in the case of Google not allowed to operate in china, the culture and values of the country didn’t allow the company to operate its free usage policy. The culture wouldn’t allow the Google brand to operate. But is this just a stubborn country or is it a more open issue where globalisation can be a problem when a company moves into the open market.
One important point to be aware of is that there can be more than one culture within an organisation. Shein (1992) suggests that there may be more than one and the variation between subcultures in the group may lead to the breakdown in communications when looking at groups (Shein 2004). If this is the case then many of the large corporations such as IBM and Shell have different groups within in the organisation and within the different subsidiaries worldwide. These different cultures together are creating new cultures and these cultures are making the corporations work better.
The HRM Department will always have a difficult task of making sure that the move is easy. Once a company has moved into one overseas subsidiary it will become easier for the next move and they can build on the experience they have endured. Globalization is one of the main characteristics of a multinational corporation; globalisation refers to refers to the shift toward a more integrated and interdependent world economy through the merging of historically distinct and separate national markets into one huge global market place’ (Hill 2005).
There are some characteristics that help to show why perhaps there is less corporate culture in today’s corporate world; these include falling barriers to cross border trade, liberalization and adoption of free market integration of the world financial markets, advances in technology and the convergence in consumer lifestyles. Moving whole organisations can come with its problems especially for the HRM Department. Crossing the national boarder for business can be difficult. How a company initially integrates into the company can be the success and failure of the company.
Hofstede (1994) did work based on what was going on in one of the largest multicultural organisations in the work. It was based on IBM. He stated ‘that the only cultural difference between its employees was the nationality and they all brought the same values and morals of the company when working. But he did state some problems with the IBM model and cultural difference. The first being social inequality, what would often happen is a manager would be brought in from America to the new country where IBM was located and use him as a manager.
This created social inequality, and create bad relationships between workers and with other employees. The relationship between men and women, in the ‘western’ world we see that the dived between men and women getting less as women are becoming more accepted into our society. In the new countries when IBM was integrating the need to understand the status of women was important. Women need to be considered very carefully for the role. Rightly or wrongly this was the only way that IBM could operate in country.
Finally the ways of dealing with uncertainty, it was very difficult for please to express their views in a different culture, aggression and language will generally be perceived differently where ever you go within a country and it is important to understand the culture that you are working in (Hofstede 1994) A lot of what multi-cultural organisations are is a bi product of their own host nation’s cultures. Moving this culture across national borders can prove problematic. Cultural differences are difficult for a HRM to work around, when moving into a country as they have been around for years.
One of the hardest steps will be the language barrier, to gain a better understanding a multilingual manager will help to create steps into understanding the culture. (Nick Wilton 2011 p. 123). This is the case with companies such as Eriksson and Volvo which has moved into international markets and as result had adapted their culture. National differences represent a constraint on transportability of MNC strategy and corporate strategy; the constraint can lead to frictions within the company.
There can be a laissez-faire approach by the companies and they will be very quick to try and keep the employees happy. But employees will feel that unless this approach is done for the betterment of the employee, then it’s not worth doing. This is very important for the company to not fall into the employee’s hands and bow down to there every demand. It is vital that they keep the values of the companies intact and make sure that they work with employees to make sure that they are content.
What we can see is that because of the formation of these multicultural acts there are cultural acts which are being broken down. We can see that from a direct result of multinational organisations moving into countries, people migration is also occurring and bringing in their own cultural influences. Patterns of international migration are changing the composition and the make-up of countries and this is having an effect on the demographics and make up of companies. (Nick Wilton 2011 p.
124) Technology is also playing a massive part on the culture within an organisation. With new social media networks such as Facebook, twitter and blogs it means that within a world there is another world, made up of interactive cultures. These international cultures can lead to more people moving away from wanting to interact with people in the proper way and using phones and technology. This lead to the break down in actual communications has meant that community is almost non-existent in someplace as the online base is far more interesting.
Employees now have the option to work from home and culture may as a result be moving in a different direction. This could mean less people entering the office, could this meant the end of corporate culture? When the EU was created in 2000, people were seen to be giving up some national heritage, this includes the countries currency. The nations joined a single currency and many viewed this as step towards a new culture. However many didn’t like this new ‘European Culture’ lots of people wanted to remain within their own nation and keep it that way.
This links directly to companies when moving into a new area. Although initially they may think that they can just get things to work together. They actually can’t and what happens is that new cultures are created a combines culture. In 1998 there was a merger between two companies, the German company Daimler ad American Chrysler, these two companies had two very different cultural differences. The Germans were very traditional solutions for engineering and the Americans where supporting price promotion and discounting strategies.
At the beginning of the merger the cultural dissonance didn’t help many top management were cut and it resulted in a lot of differences and disagreements between the two companies. In the end the only thing right for the companies to move forward was to in fact just sell the Chrysler arm of the business in 2008. This is a clear example of when two cultures came together and didn’t work; it shows even though too large companies in two large countries culture can still be extremely different and it doesn’t always work.
(Johnson and Turner 2003 p. 311) To conclude, national culture has a huge influence on organisation culture especially those host nations. Many of the examples looked at in this essay show that people have to work together to get round issues such as Language, religion and education, but sometimes it doesn’t work. What is evident is that the more we move around the world the cultures are becoming closer together and the more western approach to business there is. This is creating similar cultures especially within the corporate world. What is
evident is that newer Corporations such as Facebook and Google seem to be leading the way with its new age of corporate cultures. When moving into new countries, subsidiaries need to be seen taking into account local people and local cultural, whether this is religion or the history it needs to be respected. Technology has reinvented culture and many seem to be benefiting form social media. Culture is an ever changing state and will always need to keep changing as long as we are moving across nations. References Peters, T. P. & Waterman, R. H. (1982) In Search of Excellence, New York: Harper & Row